Music streaming breaks through $1bn sales barrier

Music subscription services including Spotify and Deezer have broken through the $1bn (£600m) sales barrier worldwide as increasing numbers of fans choose to pay for music online.

Streaming and subscription revenues rose by more than 50% over the past year to reach $1.1bn, helping overall sales of recorded music in Europe grow for the first time in 12 years, according to figures published yesterday.

Easily accessible from smartphones and tablets, subscription services are popular with people looking to try out new music without committing to buying a download or a physical CD. Consumers say they are attracted by a cheap, user friendly and legal alternative to pirated downloads. "It is now clear that music streaming and subscription is a mainstream model for our business," said IFPI chief executive Frances Moore.

The IFPI also said that One Direction were the biggest selling artists last year, with 4m physical and digital sales for their Midnight Memories album. Katy Perry's Prism was the best selling album by a female artist, in sixth place behind Eminem, Justin Timberlake, Bruno Mars and Daft Punk.

Consumer technology companies have been racing to join the music streaming trend, with Apple launching iTunes Radio and Google promoting its Play store, with smaller players like Beats Music, created by the team behind the Beats headphones brand, also joining the fray.

There are signs that in Britain and America streaming may soon generate more revenue for the music industry than downloads from online stores such as Apple's iTunes. Subscription services now account for a third of all digital sales globally, with downloads making up the balance, but the IFPI data shows that the two formats are growing at different rates.

In the US the number of people claiming to use subscription and streaming rose from 19% in 2012 to 23%, while the number downloading fell from 28% to 27%. In Britain downloaders remained static at exactly one third, while subscribers grew from 19% to 22%. In Sweden, France and Italy streaming is already more popular than downloading.

Digital formats now account for 39% of all music sales, or nearly £5.9bn out of £15bn, and while sales of physical CDs and vinyl declined steeply in 2013, they still contribute just over half the industry's income. A recent crash in music sales in Japan, which accounts for one fifth of music industry sales and where physical formats remained popular for longer than elsewhere, meant sales across all formats globally fell 3.9%.

However, vinyl continued to make a comeback. Sales increased by 32% in America and by 101% in the UK in 2013.